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Bukele Promises More BTC Purchases |
Led by President Nayib Bukele, El Salvador apparently has no intention of stopping its accumulation of bitcoin (BTC) no matter what the IMF demands. "'This all stops in April.' 'This all stops in June.' 'This all stops in December.' No, it’s not stopping," Bukele posted on X on Tuesday afternoon. "If it didn’t stop when the world ostracized us and most 'bitcoiners' abandoned us, it won’t stop now, and it won’t stop in the future. Proof of work > proof of whining." Bukele's social media post came shortly after the International Monetary Fund (IMF) published more details about its $3.5 billion deal with the Latin American nation. The IMF claimed as part of the loan package to have imposed a prohibition of "voluntary accumulation of bitcoin by the public sector." Perhaps in response to the IMF posting, or perhaps not, El Salvador late Monday night disclosed the purchase of 19 bitcoin over the previous seven days and then on Tuesday afternoon disclosed the purchase of one additional token on top of that. The IMF news drew a number online howls by bitcoiners, including from Samson Mow, who has at least previously been close to President Bukele. "No more #Bitcoin buys for El Salvador," said Mow earlier on Tuesday. "The buys will all stop within a few months," he said later after the country did indeed make an additional purchase. The Salvadoran government currently holds 6,101.15 bitcoin, worth roughly $530 million at bitcoin's current price of around $88,000. "The message is not just important — it's a catalyst for monumental change. Thanks [Nayib Bukele]," Juan Carlos Reyes, president of El Salvador's National Commission on Digital Assets (CNAD), posted on X, linking back to Bukele's post. |
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Ether Came Close to Massive Liquidation |
An ether (ETH) position worth more than $126 million came within 4% of being liquidated amid a crypto market plunge on Tuesday.
ETH has now retraced more than the entirety of Sunday's rally, shedding 22% of its value in the past 48 hours as it trades at $2,080. A fortuitous bounce at $2,000 protected Ethereum's decentralized finance (DeFi) ecosystem from a series of liquidations on collateralized debt platform MakerDAO. The first level sat at $1,929 with another two positions set to be liquidated at $1,844 and $1,796. The combined value of all three positions is $349 million. Price action is often drawn to liquidations levels as trading firms target areas of supply. When a liquidation is triggered on MakerDAO, the ETH pledged as collateral will be sold, or auctioned off, with a portion of fees going to the protocol. In terms of MakerDAO, the ETH is often purchased at a discount and later sold on the wider market for a profit - which has the potential to cause an additional drawdown in price. Liquidations in DeFi are more impactful than futures as it involves spot assets and not derivatives, which boast higher levels of liquidity due to high leverage. In this case, it is advantageous for trading firms to target these levels as a liquidation would provide short term volatility and potentially a cascade, which is when one liquidated position forcibly leads to several others. Once a cascade is concluded and buyers have absorbed the fresh supply, price typically heads back up, which can tempt the liquidated trader into buying back their long position. Data from DefiLlama shows that $1.3 billion worth of ether is liquidatable with $427 million of that being within 20% of the current price. ETH has underperformed against bitcoin (BTC) throughout the recent bull market, slumping to a ratio of 0.0235 compared to previous cycle highs at 0.156 and 0.088. This is partly due to institutional inflows into numerous spot BTC ETFs, but also due to the rise of other blockchains like Solana and Base that have stolen market share. |
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$5 XRP Call Options Popular on Deribit |
Payments-focused cryptocurrency XRP peaked at $3.40 in January but has since dropped 30% to $2.40. Despite this decline, the $5 call option remains the most favored bet on Deribit, offering significant upside potential for buyers if the price exceeds that level. However, this does not necessarily indicate an outright bullish positioning among traders. At press time, the $5 call is the most popular strike, with a notional open interest of $3.84 million—the highest among all XRP strikes on the exchange, according to data source Deribit Metrics. Notional open interest reflects the dollar value of all active options contracts at any given time. On Deribit, one options contract represents one XRP. "Most of these are covered calls," explained Lin Chen, Deribit's Asia Business Development Head, in an interview with CoinDesk. This explains the substantial buildup in open interest for these out-of-the-money (OTM) calls. The covered call strategy involves selling higher-level OTM calls while holding the underlying asset—in this case, XRP. This approach allows traders to capture the premium from selling or writing the call while limiting potential losses from an unexpected market rally. This strategy not only generates additional yield on top of their holdings but is also popular in traditional markets as well as in bitcoin and ether trading. |
Trump Ready to Sign IRS Resolution |
The White House is signaling a likely approval from President Donald Trump if a congressional resolution hits his desk that would rescind a crypto Internal Revenue Service rule approved just before he returned to office. Trump's senior advisers will recommend he sign the Congressional Review Act resolution into law, according to a Tuesday statement posted by David Sacks, the president's crypto czar, saying that the "midnight regulation in the final days of the previous administration" is an unnecessary burden on decentralized finance (DeFi) in the U.S. The rule "inappropriately requires certain DeFi participants to report gross proceeds from cryptocurrency sales and other digital asset transactions, including data about the taxpayers involved," according to the statement, which emerged as the U.S. Senate began considering the resolution that could delete the IRS' work under the authority of the CRA. In the opening moments of what could be a longer floor debate on Tuesday, a number of Democrats voted yes on a motion to proceed with Republican Senator Ted Cruz's resolution, showing some split in the party over opening the discussion on it. The initial motion to proceed with Senate action drew what's known as a super majority of senators, 70-28, meaning more than two thirds of the chamber voted yes to move ahead. "In a bipartisan, super majority vote, the Senate voted to move forward to discuss and debate the CRA resolution," noted Jennifer Rosenthal, a spokesperson for the DeFi Education Fund. "This is a tremendous step forward, and now we move to the debate before the full Senate vote." In order for the CRA resolution to reach Trump, it has to pass both the Senate and the House of Representatives, where the matter had previously advanced through a committee vote. The CRA allows Congress to get rid of the rules of federal regulators approved in a very recent time window, making a tight deadline for the lawmakers to oppose the work of the previous administration. Senator Cynthia Lummis, an industry supporter who heads a digital assets subcommittee, argued in a post on social-media site X that "these heavy-handed federal rules threaten to drive American crypto entrepreneurs overseas at a time when we should be cultivating this industry at home." |
Nic Carter: 8 Reasons Crypto Reserve Is Bad |
One might think that virtually all Bitcoiners would be thrilled about the notion of the U.S. government acquiring BTC (and perhaps a basket of other cryptoassets) and effectively ratifying it as a global asset of consequence. However, I count myself among the few holdouts who don’t see the development as positive for either Bitcoin or the U.S. government itself. Here’s eight reasons why I don’t support the policy.
What is easily done is easily undone
If Bitcoiners want a reserve to last, they should want Trump to seek Congressional authorization for a purchase (as is customary for any large outlay). If it is done solely by executive fiat, the next administration will not feel bound by the policy and could trivially reverse it (and nuke the market in the process). If Bitcoiners sincerely believe it benefits the U.S. to acquire bitcoin and hold it for a long period of time, then they would have no issue insisting that the government pass a law authorizing spending for the Reserve, rather than having Trump enact the policy unilaterally. The fact that many Bitcoiners are hoping that Trump makes the policy without asking Congress for approval shows that they are chasing a short-term pump, rather than actually being sincere about the long-term value of the Reserve for the U.S. A future Democratic administration will have no qualms about immediately divesting the Reserve. The global reserve issuer should not disrupt itself
The U.S. is the issuer of the global reserve currency. We still don’t know how the Crypto Reserve will be positioned – as simply an investment fund, or something more inherent to the dollar such as a new commodity-based currency system like the old gold standard. If the Crypto Reserve is contemplated as providing a new backing for the dollar, I believe this will cause significant unease in dollar and Treasury markets. Effectively, the government will be signaling that it believes it no longer has faith in the dollar system as it currently exists, and a radical change is needed. I imagine that this would cause already-high rates to rise, as the market starts to wonder whether the U.S. is contemplating a default on its debt. The government should be focused on shoring up investors’ faith in its ability to sustain its debt obligations by pursuing pro-growth and deficit-reducing policies, not toying with the entire structure of the dollar system. Many Bitcoiners don’t buy this line of reasoning and simply want to accelerate the collapse of the dollar. I view this as a kind of financial terrorism. I don’t believe in financial accelerationism nor do I think bitcoin – or any other cryptoasset – is ready to serve as the backing of a new commodity standard for the dollar.
The U.S. already has plenty of exposure to Bitcoin
American funds and individuals hold more Bitcoin than the citizens of any other country on the planet – almost certainly by a large margin. The U.S. government already benefits from this state of affairs. When Bitcoin goes up, those Americans who realize their gains owe taxes to the government – either 20% or 40% of their gains based on how long they have held the position. This is a meaningful point not to be overlooked. The U.S. already benefits when Bitcoin goes up, through tax realizations – more than any other country. In light of this, do we really need to pick a massive fight and insist that the U.S. government gain direct exposure for these assets, too? No one is pushing for the U.S. government to acquire Apple or NVIDIA stock. Why Bitcoin?
There is no “strategic” value in a crypto reserve
Generally, assets and commodities that the U.S. acquires at the government level are things that might be required in a pinch, and have to be accumulated ahead of time. The Petroleum Reserve is a good example, as oil is clearly an essential commodity, and in a crisis, we might not be able to acquire all the oil that we need.
We also maintain reserves of other sorts of strategic assets, such as medical supplies and equipment, rare earth minerals, helium, metals like uranium and tungsten, and agricultural commodities. These all have a clear and obvious purpose: creating a reserve that can be dipped into in a time of emergency. We also stockpile foreign FX, in case we need to make interventions into currency markets, although these interventions are increasingly rare.
There is no obvious strategic use for bitcoin (and certainly not Cardano or Ripple). Ordinary Americans do not need a “supply” of bitcoin or any other cryptoasset to support their quality of life. This might change if the entire financial system runs on a blockchain and we need the tokens for gas (the one analogous "industrial” use I could think of), but that’s not the state-of-play today. The only “strategic” use for bitcoin is simply going “long” the asset at the state level and selling it later, but you could accomplish this with any other financial asset. There’s nothing unique about bitcoin (or any other cryptoasset) in this regard.
Of course, if you’re going to ultimately back the dollar with bitcoin in some kind of neo gold standard, then it would have a strategic use (in which case you should refer back to point #2). But I don’t think that is the intent right now.
Read the rest here. |
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